Mondi sees Q1 operating profits up 15% yr-on-yr

Paper products maker Mondi said it expected first quarter underlying operating profit to be 15% higher year on year at €295m and 6% up on the fourth quarter of 2017.

Higher average selling prices and profit improvement initiatives across the group more than offset higher operating costs, the impact of maintenance shuts and negative currency effects.

Mondi said a prolonged maintenance shut at its Richards Bay mill in South Africa during the quarter would hit full year operating profit by about €115m, slightly above estimates, of which around half will be incurred in the first half of the year.

Currency movements hit operating profit year on year, driven mainly by a weaker US dollar and Russian rouble relative to the euro, and a net negative impact quarter on quarter mainly as a result of a stronger South African rand.

Like-for-like sales volumes were stable on the comparable prior year period, with growth in packaging paper offset by lower volumes in uncoated fine paper due to the Richards Bay shutdown, it added.

“Selling prices for the group’s key paper grades were, on average, above both the comparable prior year period and the previous quarter as the upward pricing momentum witnessed during 2017 continued,” Mondi said.

“Costs were generally higher than the comparable prior year period and the previous quarter. Among key input costs, wood, energy and chemical costs were higher than the comparable prior year period.”

“The notable exception was paper for recycling costs, where average benchmark European prices were down 15% compared to the first quarter of 2017, and 16% lower sequentially, as the Chinese import ban continued to impact global trade. Cash fixed costs were higher, largely as a result of the impact of maintenance shuts.”